It has long been recognised that no membership association or trust board is immune from internal politics. This can take the form of power play between individual board members and outright faction fighting for influence and control. There is sufficient evidence that voluntary organisations can easily fall prey to the ambitions and manipulations of a small minority of governing stakeholders. This can negatively impact upon the members, unsettling even the staunchest of supporters.

This was vividly illustrated in the case of the Council of Small Business Organisations of Australia, commonly known as COSBOA. Serving as an influential umbrella to 30 small enterprise composed associations, it has a reputation of political influence at the highest level – in regular contact with Ministers in Government and their counterparts in opposition. Interestingly, COSBOA doesn’t maintain a fully functional national office, and its chief executive is a small business practitioner who is not a “professional association executive”.

Simmering internal dissent came to head with the resignation of COSBOA’s chairman and two other directors, alleging board misconduct and compliance breaches. The chief executive of the Institute of Public Accountants was reported as stating that some directors used their position to gain financial advantages, questioning the solvency of the organisation and its regulatory compliance. These concerns were also reported to the Australian Securities and Investment Commission. The resigning Chairman’s concerns were directed to the Executive Director with an allegation that he had taken sides in the dispute in order to protect his position.

This was followed by repudiating statements from a former chair, who in speaking to the media stated that the accusations levelled against certain members of the board and executive director were largely unfounded and had been blown out of proportion. A letter was also sent to members explaining the situation as reported by smartcopy.com.au – it even played out on facebook and was reported in Small Business Australia.

Regardless of the outcome of this dispute it has attracted such wide publicity in the business press that in spite of a resolution, the blemish on the organisation will take some time to remedy. It will also likely have an effect on its reputation and relationship with the federal political establishment. Adding insult to injury with public perception was the release of information that the cigarette industry lobby was a major sponsor of COSBOA.

This case study illustrates the importance of good governance and adherence to procedure that involves a declaration of personal and other interest of all board members and a record of proper fiduciary and regulatory supervision. Directors should be familiar with the constitution and meeting procedure to ensure proper conduct and compliance at all times.

The NZARC can provide an advisory service to deal with enquiries specific to voluntary governance.

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